A match made in Heavenly
“Charming mountain fixer-upper with fantastic views of Lake Tahoe and world-class skiing right in your backyard. Motivated seller. Make offer.”
Heavenly Ski Resort didn’t post an ad as its owner floundered in red ink. But Vail Resorts knew a deal when it saw one, picking up Heavenly for a net $99 million. Five years ago, American Skiing Co. paid a combined price of $288 million for Heavenly and Steamboat in Colorado.
Since then ASC has fallen on hard times, with its stock nose-diving to 29 cents per share before getting booted from the New York Stock Exchange in March. In the past year, Vail Resorts grew its portfolio by $225 million; ASC lost nearly that much in the same time span.
With the deal closing two weeks ago, Vail can move forward with plans to upgrade Heavenly with new chair lifts, better restaurants and expanded services at its lodges. The company has pledged to spend $40 million in the next five years.
Vail Resorts also owns Vail, Keystone, Beaver Creek and Breckenridge ski areas, all in Colorado. By picking up a California property, Vail officials can diversify their income and thus lessen the impact of a poor snow year in the Rockies.
At Heavenly, skiers can look forward to better and more consistent services. Boulder Lodge, on Heavenly’s Nevada side, and its adjacent chair lift opened only intermittently this season as the ski resort tried to cut costs.
“It’s no fault of the current management. The ownership was so financially stressed,” Vail President Andy Daly said.
Daly said Boulder Lodge will remain open throughout next ski season. The Stagecoach and California base lodges will get a new look with new paint, carpet and bathroom facilities. On the Sky Deck, a new restaurant and more retail options will be offered, he added.
Daly believes Heavenly will keep the same number of workers, which peaks at 1,600 in the winter.
“We may shift responsibilities, but I can’t see it running with less employees,” he said.
In line with a national trend, Vail would like to position Heavenly as more of a four-season resort. Heavenly already has opened up eight miles of terrain to hikers and is considering whether to use a natural rock amphitheater for summer entertainment.
Plans are also coming together to hold guided U.S. Forest Service hikes, establish stargazing venues and erect a climbing wall on the mountain.
John Wagnon, Heavenly vice president of marketing, said his new employer is “taking a wholesale look at all the opportunities and making minor adjustments.”
Even with the planned improvements, Vail Resorts will have its hands full. There are a dozen alpine ski resorts within an hour’s drive of Heavenly, including Squaw Valley, site of the 1960 Winter Olympics. A few hours south, Mammoth Mountain has become increasingly assertive and Intrawest is building three new neighborhoods.
Heavenly started out with modest beginnings. The Bijou Skiway, as it was called in the late 1940s, sported a rope tow that took skiers 1,000 feet up. Today, Heavenly accounts for 28 percent of Tahoe-area skiers, hosting 846,000 skier visits last year. The resorts draw a combined 2.5 million visitors to the Tahoe area, said Bob Roberts, executive director of the California Ski Industries Association.
But Heavenly has the largest mountain (4,800 acres), the highest elevation (10,000 feet plus) and the largest vertical drop (3,500 feet). Financial problems aside, those natural assets led Ski magazine to rate Heavenly as one of the top 15 resorts in the nation.
With Vail on board, Heavenly’s fortunes can only improve, Roberts said.
“Vail has a great reputation. Its involvement is a tremendous boost because American Skiing was stripping Heavenly. It was like playing with one hand tied behind its back,” Roberts said.
Investing in the future
On the other hand, ASC made a major investment with its $25 million gondola, which opened in December 2000. The gondola stretches 2.4 miles, carrying eight skiers per car from street level at 6,200 feet to 9,100 feet elevation.
Next to the gondola, two giant redevelopment projects are taking shape. The Marriott Grand Residence Club and the Marriott Timber Lodge, worth a combined $220 million, are scheduled to open in November. Within walking distance of the base of the gondola are thousands of hotel rooms and casinos, including Harrah’s, Harveys, Caesars and the Horizon.
“In the last five years, Tahoe has begun a serious program in terms of attracting the destination traveler,” Roberts said. “These programs are now bearing fruit.”
Vail Resorts has been warmly welcomed by the community, including the city of South Lake Tahoe and businesses at Stateline across the Nevada border. Even other ski areas are enthusiastic.
“In general, the overall feeling is it’s a great thing,” said Katja Dahl, Squaw Valley’s spokeswoman. “Great for Heavenly. Great for the region. It can only help boost skiing and boarding for the region.”
Megan Waskiewicz, spokeswoman for Sierra-at-Tahoe, Heavenly’s nearest competitor, thinks Vail’s entry raises the bar for all Tahoe resorts.
“We’re excited about Vail coming to this destination. I think the changes are going to benefit the region,” she said.
“We’re very hopeful this will be a positive relationship,” South Lake Tahoe Mayor Brooke Laine said, though she knows Vail Resorts won’t single-handedly solve all the town’s problems, including affordable housing. “It’s ironic. We always said we didn’t want to be another Vail.”
— Managing Editor Michael Green contributed to this story. Susan Wood can be reached at (530) 542-8009 or at firstname.lastname@example.org
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